More than a billion people lack access to clean drinking water. Many more must struggle to meet their daily needs for water—or to pay the high costs for this essential commodity. The reasons for these challenges? Urban water networks are aging. Rapid urban-ization is increasing demand faster than networks can expand. Many people live in water-stressed regions and water sources are being polluted by industrialization, agricultural runoff, and lack of sanitation services.

People obtain water in many ways. Some collect it at no “cost” (apart

from the considerable cost of their labor) from streams or other surface

sources or from wells or community standpipes. Others must pay for it.

Payments to large urban water systems dominate recorded household

spending on water. But households also purchase water from vendors

and small-scale community water systems and pay for point-of-use ser-

vices such as water purification.

The private sector is often the provider of last resort.

Small-scale water vendors are often the only option in

peri-urban communities. Improved point-of-use systems

being devised and marketed by the private sector also

show promise for giving BOP households better options

for water supply, especially in rural areas. New models of

community engagement and public-private partnership

are emerging.

The measured BOP water market in Africa (11 countries),

Asia (7), Eastern Europe (5), and Latin America and the

Caribbean (7) is $11.3 billion. This represents the annual

household water spending of 2.0 billion people in 30 low-

and middle-income countries. The total BOP water mar-

ket in these four regions, including all surveyed countries,

is estimated to be $20 billion, accounting for the spending

of 3.96 billion people (see box 1.5 in chapter 1 for the es-

timation method).

Latin America has the largest measured BOP water

market, at $3.8 billion for 262.5 million people. The re-

gion’s total BOP water market is estimated to be $4.8 bil-

lion, accounting for the spending of 360 million people. In

Asia the measured BOP water market is $3.2 billion (1.4 billion people),

while the estimated total BOP water market in the region (including the

Middle East) is $6.4 billion (2.9 billion people). In Africa the measured

market is $2.5 billion (252.4 million people), and the estimated total mar-

ket $5.7 billion (486 million people). Eastern Europe’s measured market

is $1.7 billion (138.9 million people), and its estimated total market $3.2

billion (254 million people).

The BOP share of total spending in measured markets ranges widely.

Asia has the largest BOP share, at 68%. In Latin America and Eastern

Europe the BOP share is 45%. In Africa the BOP share is 60% .

The regional averages mask large differences within regions. In

Eastern Europe the BOP market share ranges from a low of 24% in FYR

Macedonia to a high of 98% in Uzbekistan. Africa shows a similar spread:

in Rwanda the BOP accounts for a mere 14% of household spending on

water, while in Nigeria the BOP is effectively the entire market, account-

ing for more than 99%. In Latin America, among countries with larger

populations, only Peru has a BOP market share of well over half, at 71%.

In Asia only Thailand and Nepal have BOP market shares hovering

around 50%; other countries have much larger BOP market shares.

By many measures (not just size), the BOP water market is

“depressed” compared with other BOP markets. BOP households gen-

erally represent a smaller share of the national water market than of

other markets, including energy and transportation. Moreover, while

the BOP accounts for 71% of the population in Latin America, it accounts

for only 45% of recorded water spending—and a similar pattern holds in

other regions.

Bottom-heavy BOP water markets—in which more than 50% of recorded

spending occurs in the bottom three BOP income segments—are ap-

parent in 10 of the 30 measured countries. Eight are in Asia and Africa

(Indonesia, Pakistan, Tajikistan, Burkina Faso, Côte d’Ivoire, Malawi,

Nigeria, and Uganda). In these countries where the bottom three BOP in-

come segments dominate the BOP market, they often also dominate the

national market—representing more of the market than both the upper

BOP income segments and the mid-market segment combined.

Some cases are even more extreme, with more than 50% of all re-

corded national water spending occurring in the lowest two BOP income

groups. Burkina Faso, Côte d’Ivoire, Nigeria, and

Uganda all exhibit this pattern. In Nigeria the 22.3

million households in the BOP500 and BOP1000

segments account for 75% of the national water mar-

ket—$444.6 million in annual spending.

Among Asian countries, a similar concentration

occurs in Pakistan, where the BOP500 and BOP1000

groups account for 54% of the national water mar-

ket, and in Tajikistan, where they account for 57%.

In Indonesia, with the third largest measured

water market in Asia, the lowest three BOP income

groups dominate the market, accounting for 52% of

total spending—$421.1 million across 125.6 million

households.

Top-heavy BOP water markets, in which the top

three BOP income segments account for more spend-

ing than the bottom three, predominate in Eastern

Europe and Latin America—occurring in 10 of the

12 measured countries in these regions. These top-

heavy BOP markets often coincide with a national

market dominated by the mid-market segment. Paraguay represents an

extreme case. In that country the mid-market segment represents 78% of

recorded national water spending—but only 36% of the national popula-

tion. In contrast, the bottom three BOP groups represent only 3% of the

national water market—but 36% of the population.

Where top-heavy BOP water markets occur in Asia and Africa, they

rarely coincide with mid-market dominance. Bangladesh has a top-heavy

BOP water market, for example, yet the mid-market segment accounts

for only 15% of national spending.

BOP water markets tend to be predominantly urban, even where most

BOP households are rural. Among measured markets the only excep-

tions to this pattern are Thailand, Uganda, and Uzbekistan. Growth

in BOP water markets has been particularly rapid in peri-urban areas,

which often lie beyond municipal supply networks. Here, non-net-

worked but relatively large water purification initiatives show promise

(case study 4.1).

In Africa the most heavily urban BOP water markets are in Djibouti,

Gabon, Rwanda, and Sierra Leone, where urban spending accounts for

more than 90% of the total. In Gabon the urban BOP market is 32 times

the size of the rural one. At the other end of the spectrum is Uganda,

whose rural market is 6 times the size of its urban market.

Urban spending also drives BOP water markets in Asia. In Pakistan,

for example, urban areas account for 84% of the BOP water market, but

only 29% of BOP households. Eastern Europe and Latin America, where

BOP households also are mostly urban, show similar or even stronger

urban dominance. In Ukraine 87% of BOP water spending is urban; in

Colombia, 93%.

Urban BOP households also spend significantly more on water than

do rural BOP households. In Malawi total BOP spending is twice as much

in urban as in rural areas, but spending on water 16 times as much. Nepal

shows a similar pattern: the urban-rural ratio for total household spend-

ing is about 2:1, while that for water spending is 22:1. Similar but much

less extreme differences show up in most countries of Eastern Europe

and Latin America.

BOP households still meet much of their need for water by gathering

it from “free” sources—surface water and wells. Some of these sources

are safe and protected; others are subject to serious contamination and

consequently pose health hazards. The variety of contaminants—waste,

heavy metals, chemical and biological agents—requires a range of solu-

tions (case study 4.2).

BOP households in Africa are the most likely to rely on surface water.

In the measured African countries 17% of BOP households report surface

water as their primary source (compared with only 1% in the mid-mar-

ket segment). Use of surface water is consistently highest in the BOP500

group and declines as incomes rise. In Burkina Faso, for example, 81%

of households in the BOP500 segment use surface water, compared with

69% in BOP1000 and 55% in BOP1500. In Sierra Leone the rates are 47%,

38%, and 27%. In Cameroon, 49%, 40%, and 20%.

In Latin America a smaller share of BOP households rely on surface

water as a primary source. Moreover, reliance on surface water drops

more quickly as incomes rise. In Peru, for example, 45% of households

in the BOP500 segment rely on surface water, but only 32% in BOP1000

and 15% in BOP1500.

Use of unprotected wells by BOP households, where present in Asia,

Eastern Europe, and Latin America, also drops off quickly as incomes rise

through the lower BOP income segments. Paraguay is the lone exception,

with use of unprotected wells remaining consistently high across all BOP

income groups.

In Africa use of unprotected wells similarly remains high across BOP

income groups in Malawi, Rwanda, Sierra Leone, and Uganda. In Malawi

26% of BOP households—and in Rwanda, 45%—report relying on unpro-

tected wells as their primary water source.

There is a widely held view that the BOP suffers a significant penalty in

access to safe drinking water—and household survey data confirm this

view. Consider access to the most reliable and affordable source, piped

water in the home. In 9 of the 29 countries for which sufficient data exist

for a comparison, the ratio of mid-market households to BOP households

with access to piped water is 6:1 or higher. Data on access to public stand-

pipes show a similar pattern—significantly lower access in the BOP than

in the mid market.

While BOP households are more likely to use surface water and less

likely to have access to piped water, a third alternative, especially in peri-

urban areas, is to buy from mobile water vendors. But this option typically

involves a significant price penalty. One study showed that in eight major

cities water vendors charge prices 8–16 times those charged by public

utilities (UNDP 2006). Another study, covering 47 countries, found that

mobile distributors such as tanker trucks charge unit prices up 10 times

the price of piped water (Kariuki and Schwartz 2005).

Where BOP communities lack access to municipal water supply net-

works, point-of-use water purification and small-scale community-based

water purification and waste treatment can be useful solutions. The com-

munity-based approach underlies an innovative program in Orangi, an

informal settlement area in Karachi that is home to 1.2 million people.

Community-managed services—latrines, neighborhood collector sew-

ers—link to a municipal system of trunk sewers and treatment plants.

Local residents provide labor and financing, and external sources provide

technical assistance and materials. Against all expectations and under ex-

tremely difficult conditions, the Orangi project has managed to combine

cost recovery with high quality.

Similar community-based efforts are gaining traction in Bolivia. The

government is finding that engaging communities early and consis-

tently—including by educating people about fees and involving them in

construction and continuing oversight—bears fruit throughout the life

of a project (case study 4.3).